But according to the American Bar Association, estate planning products offered by do-it-yourself services were lacking in some regards. Flaws in the documents could cause different results than those intended by the creator of the estate plan. There are a couple of dangers in drafting a will and other documents that some general form documents may not adequately address.
]]> First, state law imposes certain legal requirements on wills in order for a court to find them valid, such as the number and presence of attesting witness. Wills that do not follow these requirements can be vulnerable to probate challenges after the testator's death.Second, a fill-in-the-blank will or other estate planning document may not be sufficiently tailored to a person's individual circumstances. Well-drafted wills are created after a detailed examination of a number of potential future fact patterns. Testators should ask what they would want to do if any combination of beneficiaries happened to predecease them. The will that is the product of that process will be designed to track a testator's intent exactly. Form documents may lack that specificity.
Experienced professionals can ensure that the formal legal requirements are met and can create a detailed estate plan in accordance with each person's circumstances. In addition, they can offer intricate and sophisticated estate planning options that may not be available in form books.
Source: Forbes, "Is Do-It-Yourself Estate Planning a Valid Option?" Bernard A. Krooks, May 17, 2012.
]]>A deceased person's estate can contain a variety of items. We may think of the traditional plot of real estate, portfolio of investments and collection of assorted tangible personal property. But estates can also include the right to use a person's image or reproduce a song or book a person has written. Thorough estate planning seeks to protect those rights and preserve them for the beneficiaries of the estate.
]]> Specifically, the lawsuit against Burberry alleges that the company published a photo of Bogart wearing a Burberry coat in the closing scene of Casablanca. The clothes maker had placed the photo in a visual history depicting the development of the long-standing brand, which it posted on social media sites such as Twitter and Facebook.Burberry has sued the Bogart estate in kind, arguing that it had obtained permission to use the picture from a photo company, which had the licensing rights instead of Bogart's estate. Burberry also suggested that the photo was intended for informational purposes and not for advertising.
While not everyone's estate will contain intellectual property, Bogart's estate provides a lesson that it may be necessary to plan for the protection and preservation of estate assets long after the original owner of the property has passed away.
Source: New York Daily News, "Bogart sues Burberry over 'Casablanca' photo?" May 4, 2012.
]]>There are different ways to approach the problem. One is through a conservatorship or guardianship. In a particularly famous case, the daughter of Zsa Zsa Gabor is seeking to be appointed conservator over her mother's affairs. The former actress has been in ill health recently, and her daughter claims that she is not receiving proper care. The daughter is also concerned about the way in which her mother's husband manages Gabor's finances.
]]> For his part, Gabor's husband has argued that he is doing everything he can for his wife, but that her medical bills are extensive and she does not currently have the income required to support her care. The two sides are using mediation in an attempt to reach an agreement on the conservatorship issue. Absent a mediated agreement, the daughter may have to take her case for conservatorship to court.While conservators can help incapacitated persons manage their affairs, there is a more efficient option. A person can create a durable power of attorney, which authorizes another to handle that person's finances. There is also a comparable document for medical treatment, called a designation of health care surrogate. A person can create these documents before incapacitation occurs, which obviates the time and expense of going to court to appoint a guardian or conservator.
Source: Associated Press, "Attorneys tell judge they are trying to settle case over Zsa Zsa Gabor's care, finances," Anthony McCartney, May 2, 2012.
]]>Tax planning is always important, but has taken on added urgency because of the potential expiration of a beneficial law at year's end. Unless Congress acts to extend it, the provision that sets the lifetime exemption amount at $5.12 million will be no more in 2013. While no one can be certain whether Congress will act on this provision or not, people should at least examine what course of action they should take if it does expire.
]]> But the lifetime exemption is just one way to sidestep estate taxes and preserve more of your estate for your beneficiaries. A person can also give away small increments of property to intended beneficiaries during life. There are tax deductions for gifts to charities and spouses, and a yearly amount of gifts that can be excluded from taxation, just to name a few. Creative estate planning can tailor a gifting and transfer strategy that will minimize one's estate tax bill.Executing a plan that parcels out one's estate one piece at a time can take years. It is important, therefore, to develop the plan as early as possible. In addition, tax laws are notoriously complex, so people seeking to engage in estate tax planning can benefit from the services of an experienced estate planning attorney.
Source: Forbes, "7 Major Errors In Estate Planning," Rob Clarfeld, April 25, 2012
]]>Experts caution that there are significant drawbacks to declaring newfound wealth publicly. But there are steps one can take to mitigate these potential obstacles. A large lottery windfall is therefore an excellent opportunity to discuss estate planning devices that a person can use regardless of whether he or she has won millions of dollars, or has inherited a more modest sum from a relative.
]]> Everyone has heard the stories of lottery winners squandering their newfound fortunes. Studies confirm that nearly 90 percent end up losing it all. But they are not alone. Many professional athletes quickly run through their assets after retirement, and approximately 75 percent of people who inherit money cannot hold on to it.Trusts are one way to manage assets. They are becoming increasingly popular among people in certain states who wish to remain anonymous when claiming lottery winnings. But anybody can use them to help preserve wealth. Trusts come in many forms, including a revocable living trust, which a person can create during his or her lifetime. That person can manage the trust's assets, and in the event that the person becomes incapacitated before death, a trustee takes over management duties. At death, the assets are parceled out according to the terms of the trust.
Source: Reuters, "Illinois Mega Millions winner could face 'lottery curse,'" Andrew Stern, April 17, 2012.
]]>Such disagreements can occur in many situations and for various reasons. But one of those is when one or both spouses have children from prior relationships, or what has come to be called a "blended family." Parents may feel a natural proclivity to favor their biological children in their will. This can be a source of conflict with the other spouse, who may think that his or her equally deserving children are being shortchanged.
]]> If the two parties cannot come to a mutual agreement, one solution can be to hire separate attorneys. Some estate planners suggest that separate counsel can be particularly valuable where the spouses have a significant disagreement over the financial aspects of their estate plans.But there may be other reasons to consider getting different attorneys. The estate planning process can potentially bring to light previously hidden aspects of a relationship, such as undisclosed assets or secret affairs. In addition, where there is an imbalance of power in a relationship, such as a difference in age, wealth or power, two attorneys can diminish the power disparity and help create a mutually agreeable estate plan that benefits everybody to the best extent possible.
Source: Forbes, "Estate Planning For Couples: Should It Be A Solo Or A Duet?" L. Paul Hood, Jr. and Emily Bouchard, April 10, 2012.
]]>This question has gained additional relevance in recent decades as advances in artificial insemination have required a rethinking of traditional laws of inheritance. One Florida couple faced this reality in the late 1990s. Soon after marrying, the husband was diagnosed with cancer. He placed his sperm in a bank in the event that the cancer treatment rendered him unable to have children.
]]> The man clearly recognized the possibility that his wife could have children after his death through in vitro fertilization. Although his will failed to clarify whether such children would inherit any property and benefits belonging to him, he later executed a document that said they would.He and his wife did produce a natural child before he died a few years later. But after his death his wife used artificial insemination to give birth to two additional children. While the additional document appears to make clear that they are to inherit equally with the prior natural child, the family is now caught in a legal battle over whether they can qualify for their father's Social Security benefits.
The case went to the Supreme Court last month, where Justices heard arguments from both sides. The government believes that the two later-conceived children are not eligible for the benefits, and the Justices seemed to agree, although they labored to handle the unwieldy statutes at issue. Some believe that a ruling in the case, which will not be issued for a few months, could resolve some issues at the intersection of modern fertility technology and laws relating to inheritance.
Source: CNN.com, "Justices at odds over benefits for child conceived after death of a parent," Bill Mears, Mar. 19, 2012.
]]>While all forms of debt have an effect on a person's life, many may wonder what role it can have in a person's will and estate plan. The answer is that debt can profoundly affect what and how much your loved ones inherit. In general, before one cent reaches an heir, creditors are allowed to use a person's estate to satisfy any outstanding debts. Certain assets that pass outside of the probate process will be free from a creditor's reach, but whether an asset qualifies depends on Florida law.
]]> Although creditors can recoup their losses from a deceased person's estate, in general they cannot force heirs to take on any of the debts. But this is not true in all circumstances. A person who agrees to be liable for a debt with another will be responsible for the debt if the other dies. This can happen if two or more people co-sign for a mortgage, a credit card or any loan.Since the amount passed on to heirs can be significantly affected and diminished by debt, those designing an estate plan should understand how their debts will interact with their assets. Even heirs should know how debt functions in estate plans. Some report that creditors will contact a deceased's next of kin demanding payment for debts. Heirs should know when they may have a legal obligation to pay and when they can refuse to pay a creditor.
Source: CNBC.com, "Who Inherits Your Debt?" Shelly K. Schwartz, Mar. 16, 2012.
]]>One estate case involving wealthy siblings illustrates this point. When one woman died, she left her estate, worth approximately $10 million, to her now 85-year-old brother. But like some seniors, he is affected by dementia and has guardians. He also has Parkinson's disease. He shares a large bank account with the elderly woman who once cared for him and his sister. Allegations have arisen that the caretaker, whose mental health is also at issue, has spent $160,000 of the money in the account at various locations, including a casino.
]]> Controversy also exists around the rewriting of the deceased woman's will. Her original will provided gifts to a number of charities. But some suggest that her former estate planner, allegedly in concert with the caretaker, unduly influenced the woman to restructure her will to establish charitable trusts, which the planner would oversee and for which labor he would collect fees. The many sides involved in the dispute are hopeful of reaching a settlement.This case highlights the importance of creating an estate plan that will address even uncomfortable possibilities. No one likes to think of suffering through the gradual progression of dementia. But it will happen to some individuals, leaving them and their finances vulnerable. People can be proactive and establish a durable power of attorney, which gives a trusted person the ability to handle their finances in the event of their incapacity.
Source: The Buffalo News, "Caregiver status adds twist to Farrington case," Patrick Lakamp, Mar. 17, 2012.
]]>In order to enter a conservatorship, Spears had to be judged mentally incompetent. To be sure, Spears's conservatorship is unusual. She is young and, although we are not privy to all of the details, does not appear to be incapacitated.
]]> Conservatorships and guardianships are more often used for elderly persons who have some debilitating type of ailment--often mental--that renders them unable to manage their own affairs. In addition to the normal day-to-day tasks of paying bills and cataloguing expenses, elderly people face a host of important financial decisions. These can include how they want to divide their property and what methods they want to use to parcel it out. Certain methods of giving can have tax repercussions governed by a tangled web of rules.Unfortunately, some people encounter these decisions at a time when they are also diagnosed with a disease that affects their mental functioning, such as Alzheimer's. A guardianship can protect such a person by allowing a family member or other trusted person to take over the person's finances and personal affairs.
But guardianships are most often a back-up plan. They are usually sought when a person has not created a durable power of attorney. Because a person in need of a guardian is not competent to sign a power of attorney, the person seeking to become guardian must obtain court approval. Guardianships provide necessary protection, but one can obviate the need to go to court by creating an estate plan ahead of time that includes a durable power of attorney.
Source: Forbes, "Oops! ... Britney Spears' Conservator Did It Again," Danielle Mayoras and Andy Mayoras, Mar. 12, 2012.
]]>According to reports, Houston's estate plans included a trust for her 19-year-old daughter. The young woman will not see any money from her mother's estate until she turns 21 years of age, as Houston's will established a testamentary trust for her daughter. In order to include this type of trust in estate planning, a person must name a beneficiary, or beneficiaries, and trustee designated to administer the trust according to the individual's wishes.
]]> Apparently, Houston's daughter will receive the first payment at age 21, a second payment when she turns 25 and whatever amount of money remains when she turns 30. This payment plan reflects the singer's wishes for her child.In addition to a testamentary trust, other types of trusts can be included in estate plans, including charitable trusts, special needs trusts and spendthrift trusts. Each of these options can be designed to reflect the specific wishes or needs of the individual wishing to establish their will. For example, a special needs trust creates a plan and funds to care for a person with special needs in the event that their primary caretaker passes away.
Effective estate planning can ensure that your loved ones have what they need in the years after your passing. An unexpected death, such as Whitney Houston's, demonstrates the importance of creating an estate plan. Rather than becoming embroiled in potentially painful estate litigation, Houston's daughter will be have the financial resources she needs.
Source: Reuters, "Whitney Houston's Will Raises Trust Issues," Andrew Chow, Mar. 8, 2012
]]>Some may worry that there may come a time when they are incapable of overseeing their finances. They can address this possibility by creating a durable power of attorney. That document gives people the ability to designate someone to handle their finances--such as managing a checkbook or paying bills.
]]> Having a durable power of attorney in place can bring peace of mind that one's financial matters will be taken care of. Communicating frequently with family members, especially children, is essential. The Alzheimer's Association reports that nearly 15 million people care for someone who has a form of dementia like Alzheimer's disease, while almost 45 million people look after someone over the age of 50. Some caregivers may feel that they have too much responsibility, while others too little. But engaging the family in the discussion can reduce familial tensions and determine who is willing and able to take on the duties that a durable power of attorney confers.As with all aspects of estate planning, a durable power of attorney should be created early on and updated as necessary. Old age and illness can present their challenges, but placing your financial affairs in the hands of someone trustworthy is one way to address those challenges.
Source: Detroit Free Press, "Sibling conflicts are common when establishing who will take care of parents," Bill Ward, Feb. 15, 2012.
]]>In fact, the movie The Descendants, which is nominated for Best Picture, involves many estate planning issues. George Clooney plays the lead role of Matt King, whose family has a significant amount of Hawaiian real estate held in a trust created by their ancestors. The director of the film wanted to make the legal facts in the movie as realistic as possible, so he consulted with a law professor whose area of expertise is wills and trusts.
]]> When studying the script, the professor noticed that it dealt with trusts too simplistically. He recommended that the fictional trust in the movie reflect the legal concept of the rule against perpetuities, a centuries-old tricky principle that limits how long a trust can last. Some states have modified or done away with the rule against perpetuities altogether. An experienced estate planning attorney can create a trust that will comply with all state laws applicable to trusts.The film also deals with the practical difficulties of trusts that span many generations. A trustee is one who manages and oversees the trust, but over the course of time, trustees will naturally step down and have to be replaced. Options for trustees can include individual persons or a corporate trustee, which can be provided by a trust company or a bank.
Source: Forbes, "'The Descendants' Buries Estate Planning Lessons in George Clooney Drama," Deborah L. Jacobs, Feb. 23, 2012.
]]>This unusual legal move was supposedly prompted by the man's role in a drunk driving accident. In February 2010 he allegedly drove drunk and got into an accident which killed a 23-year-old man. He has been charged with DUI manslaughter, which carries a maximum penalty of 30 years in prison. In addition, the parents of the deceased man have brought a civil suit seeking compensatory and punitive damages.
]]> Skeptics suspect that the adoption move was meant to give the man access to trust funds, which had previously been declared immune from the lawsuit. The man's lawyer, however, countered that the man was in the midst of a dispute with the trust company and made his girlfriend a beneficiary so that she could continue that fight on his behalf in the event he is sent to prison.The trust controls a number of real estate properties and is estimated to be worth hundreds of millions of dollars. Before the adoption, a judge refused to force the man's attorney to divulge the trust's details, noting that the man had no access to trust funds. But now that his adopted girlfriend is a listed beneficiary, the judge has ruled that her share of the trust is not immune from the civil suit. The attorneys for the victim's parents have also sought to halt the sale of real property owned by the trust.
Despite this man's odd use of a trust, many people can benefit from the ordinary use of a trust in an estate plan. An experienced estate planning attorney can help create a trust tailored to your individual circumstances.
Source: The Palm Beach Post, "Parents of Scott Wilson want to block sale of 1,700-acre Texas parcel in Goodman kids' trust," Jane Musgrave, Feb. 6, 2012.
]]>When thinking of the big picture estate plan, pets may get lost in the shuffle. Animal lovers who care deeply about their pets during life may want to provide for them after their death. Absent particular instructions, a deceased person's animals may be taken on by family members, adopted or even brought to a shelter, results that the owner may not have intended.
]]> The solution lies in what is called a pet trust, which names a guardian who will take care of the pet after the owner's death. The trust also may specify the way in which the animal is cared for, including living and feeding arrangements. Lastly, the trust must contain funds to provide for the animal. Pet trusts can work for all kinds of animals, but they may be especially helpful for exotic animals with long lives, such as turtles.Some may consider pet trusts odd. Or they may think that creating one devotes too much time and resources to so simple a problem. But like all aspects of estate planning, the pet trust is about carrying out your wishes, assuring an orderly administration of your estate, and minimizing the strains on your loved ones. Since friends and relatives may not agree over what to do about your pets, it is much easier to settle the matter beforehand and ensure that your animals receive the kind of care you want for them.
Source: The New York Times, "The Pet Problem," Alyson Martin and Nushin Rashidian, Feb. 3, 2012.
]]>